CVP Analysis (Cost-Volume-Profit)

Cost-Volume-Profit (CVP) analysis extends the basic break-even calculation to answer broader questions: how many units are needed to hit a specific profit target, how much room exists before a loss (margin of safety), and how sensitive profit is to a price or cost change.

It rests on the same fixed/variable cost split as break-even analysis, which is also its main limitation — real cost structures often have step-fixed costs or curved variable costs that a linear CVP model doesn't capture precisely.